The Telecommunications Act of 1996 officially opened the local telecommunications market in the United States to competition. Prior to 1996, the Regional Bell Operating Companies (RBOCs) held monopolies on local telephone service within their regions. As a result of the Act, the RBOCs were designated Incumbent Local Exchange Carriers (ILECs) and companies competing with the ILECs are referred to as Competitive Local Exchange Carriers (CLECs). To date, states have registered hundreds of new and established companies as CLECs, and some are now offering competitive local service. CLECs offering local service can choose from two basic network strategies for providing service. A CLEC can purchase its own switching and transmission equipment and build a local telecommunications network alongside the ILEC network. CLECs following this strategy are referred to as facilities-based CLECs. Alternatively, the Telecommunications Act of 1996 made provisions for CLECs to rebrand and resell ILEC services purchased at a discount. CLECs following this strategy are referred to as resale CLECs. In some cases, a CLEC will pursue both strategies.
Although many CLECs initially pursued a resale network model, most are now exclusively focused on providing facilities-based local service. The resale model had initial appeal because it enabled a CLEC to quickly offer a broad array of services to both business and consumer customers in many geographic markets with little initial capital investment. However, the profit margins from resale proved inadequate as a viable long-term business strategy.
There are two major components to a local telecommunications network, the switching (or core) network and the access network. As an oversimplification, the switching network provides the service while the access network transports the service to the customer. For an ILEC, multi-million dollar digital switches located in every community in a geographic market constitute the switching network, while the thousands of pairs of copper wires that run from each ILEC central office (CO) to customer premises constitute the access network.
CLECs, however, demand local networks that are very different from those used by ILECs. The CLECs do not need, nor could they afford, to immediately build-out decentralized switching networks to service every potential subscriber in a market. Therefore, CLECs choose to centralize their switching systems, using one or two digital switches to service an entire market. However, while a centralized switching strategy is more efficient and less expensive, it presents a challenge to design an access network capable of serving a small, geographically dispersed customer base. An access network must accommodate the increased distance between the switching equipment and each customer site. As an added challenge, most CLECs intend to offer local telephone service and data services, such as high speed Internet access. Consequently, CLECs need access networks that are capable of delivering both voice and data services to avoid the complexity and expense of constructing separate voice and data access networks. To meet these challenges, most CLECs are turning to broadband access networks: access networks that enable a high bandwidth connection to be established between the CLECs centralized facility and remote customer sites. Transmission equipment is now available that can enable a CLEC to deliver voice and data services over several of these new broadband access networks.
Broadband access networks generally consist of two components. The first is called the backbone network that connects the centralized switching equipment of a CLEC to a centralized location within each community, such as the ILEC central office. The backbone portion of a CLEC broadband access network is usually a fiber optic network, such as one that conforms to the Synchronous Optical Network (SONET) standard. The second component is called the "last mile" network and is the connection from the community location to each customer site. There are a variety of broadband technologies available for the last mile portion, and the one selected for use by a CLEC can greatly affect the capital investment required to serve a community. The last mile broadband access technologies currently available for use in access networks by CLECs are Fiber-to-the-Building (FTTB), Hybrid Fiber/Coax (HFC), Wireless Local Loop (WLL) and Digital Subscriber Line (DSL).
Traditionally, telephone subscribers have been connected to the Public Switched Telephone Network (PSTN) through a last mile network that physically consists of a pair of copper wires running between a subscriber (home or office) and the "wire center" of the telephone company. The wire center typically serves thousands, or even tens of thousands, of subscribers in a neighborhood or community, and houses a "central office switch" that terminates each subscriber wire pair. The switch controls the telephone at each subscriber site, providing power, ringing, and audio signals in analog form over the wire pair. The switch also detects when a subscriber line goes "off hook," dials digits, etc., and in response routes and connects calls to other subscribers or to other switches in the PSTN. This in summary is known as the "Plain Old Telephone Service" (POTS) and is an analog technology (as opposed to digital technology).
Subscribers requiring more than a single telephone "line" can be served by installing the corresponding number of POTS circuits using multiple copper wire pairs. Alternatively, a "pair gain" system can be deployed, which multiplexes the signals for several telephone lines onto a single pair of wires. This is accomplished with special equipment at each end of the copper pair. The pair gain equipment converts a POTS analog signal into a digital format, usually at 64 kilobits per second. A digital connection is established over the copper pair, with sufficient bandwidth to carry all of the required bit streams. Time-division multiplexing is used to merge the bit streams. A typical pair gain arrangement is a "T-1" line, operating at 1.536 mega-bits per second (Mbps), allowing it to carry 24 individual 64 kilobit/second channels or streams. At a subscriber location, special equipment converts each of the 24 streams to and from a format of conventional POTS signals. At the wire center, similar equipment is required.
The T-1 technology is not always more economical than utilizing the existing infrastructure of the POTS system because T-1 service requires deployment of a significant amount of special equipment and infrastructure. Moreover, if a subscriber requires less than 24 lines of service, the T-1 solution is even less attractive because the equipment cost is spread over fewer lines. At the central office switch, a T-1 line is terminated by the special port that is dedicated to that subscriber, even if only a fraction of the 24 channels are used by that subscriber.
DSL is a high bandwidth technology that enables data to be transferred to and from individual subscriber locations at various speeds, currently ranging as high as 2 Mbps. Data is transferred over a DSL access portion of a local packet network (LPN) as "packets," and packets move over the LPN only when information is moving to or from the subscriber, and the line is in an idle condition otherwise. An LPN is a network that provides data connections among subscribers in a local service area with various connection types and data rates. Typically, an LPN consists of a plurality of DSL multiplexers and data switches. DSL equipment is designed to serve large numbers of subscribers, resulting in relatively low per-subscriber costs.
DSL technology stands out as being the most attractive to a CLEC in terms of up front capital investment. FTTB, HFC and WLL broadband access technologies each require the installation of significant infrastructure (fiber optic cables, coaxial cables, base stations and repeaters, etc.) which is not economical for a CLEC to service a decentralized small or medium-sized business customer base. DSL runs over existing copper last mile networks (local loops) of the ILECs and therefore does not require significant capital expenditures for deployment. Instead, the CLEC pays a monthly fee to the ILEC for each of the local loops that it uses. In addition, DSL has the correct capacity for serving residential through medium-size business markets.
In general, the DSL access portion of a local packet network does not carry voice and is not connected to the central office switch. However, some implementations of DSL can combine, on a single wire pair, both the digital signal carrying data packets, and a single POTS signal carrying analog voice. This permits a DSL subscriber to use the line for a telephone call while simultaneously transferring packet data. However, this approach is limited to a single POTS signal, and requires POTS compatible equipment to terminate the line at the wire center, in addition to the packet-oriented DSL equipment.
It is desirable to provide a system that enables facilities-based full service CLECs to transport local telephone service, including multiple voice call service, and data services to small and medium-sized business customers over an access network that supports a digital packet-based transport protocol, preferably over existing copper wire pair lines. It is further desirable that the system use the fewest number of local loops, and that a minimum amount of CLEC equipment be required at the ILEC wire center.